The document discusses methods for calculating return on investment (ROI) for social media marketing activities. It provides examples of how to quantify the financial impact of activities like blog posts, tweets, online communities, and determine the ROI. Key aspects include calculating the lifetime value of a customer, value of a visitor based on conversion rates, and using metrics like sales, costs avoided, traffic to determine if specific tactics led directly to revenue or cost savings.

1. Paul Gillin, Author The New Influencers Secrets of Social Media Marketing Social Marketing to the Business Customer Social Media ROI:Yes You Can!

2. It’s Simple, Knucklehead ROI = COST OF INVESTMENT (GAIN FROM INVESTMENT - COST OF INVESTMENT)

3. Return on Investment Or Risk of Inaction?

4. Types Of Financial Impact A. Revenue B. Costs Avoided Anything that leads to A or B, But only if you can directly equate its value to an action

5. These are NOT ROI Website Visitors Click-throughs Store visits Press coverage “ Buzz” Employment applications Retweets FaceBook friends Blog comments Video views Twitter followers Impressions Friends Coupons distributed But if you can quantify their financial impact, you have ROI!

6. Reconsider Customer Segments How Best Buy segments its customers High Low High Low Leading-Edge Technology Price Sensitivity Online Aficianados Practicals Ambivalent Aspirers Deal Drivers Who are your high-value customers? Enthusiasts

8. Stagger Activities White Paper Promotion Timeline Task Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Home page link E-mail newsletter E-mail blast Blog promotion Twitter messaging

9. Look for Impact

10. Basic Business Metrics Lifetime Value of a Customer = (Longevity * Revenue) * Margin Conversion Rate = New Customers/ Visits or Leads Value of a Lead/Visitor = Visitor * Conversion Rate * Lifetime Value

11. OK, Let’s Make it Real Typical customer Curly spends $10,000/year with you Curly is with you for five years Your profit margin is 10% Lifetime value of Curly is ($10,000 * 5) * .1 = $5,000

12. CRM Essentials Must be used by everyone who touches the customer Must document online, offline and landline communications Must span the engagement lifecycle Must enable segmentation and grouping

13. Web Analytics Must track individual visitors Must document paths to desired destinations Must identify referring sources You must use them

14. Applying ROI: Value of a Visitor Monthly Visitors 10,000 Conversion Rate .5% Lifetime Value $5,000 Calculation (10,000 * .005 * 5)/10,000 Value of a Visitor $25

15. Value of a Blog Monthly Search Traffic 3,000 Estimated Traffic w/Blog 4,000 Value of a Visitor $25 Monthly Value of a Blog $25,000 Monthly Blog Expense $6,000 ROI ($25,000-$6,000)/$6,000 316%

17. Value of a Community You want to launch a customer support forum to reduce your costs of telephone support Estimated admin costs: ½ FTE yr 1, ¼ FTE yr 2 1/10 FTE yr 3 Estimated savings: 1 FTE yr 1, 1.5 FTE yr 2, 2 FTE yr 3 Year Item Annual Cumulative 1 Forum Administrative costs $ 35,000 $ 35,000 Savings $ 70,000 $ 70,000 ROI 100% 100% 2 Forum Administrative costs $ 17,500 $ 52,500 Savings $ 105,000 $ 175,000 ROI 500% 233% 3 Forum Administrative costs $ 7,000 $ 59,500 Savings $ 140,000 $ 315,000 ROI 1900% 429%

18. Measuring the Immeasurable Lift Studies Store visits Headline Counts Employment applications Speaking Invitations Net Promoter Score Coupons redeemed If You Can Measure It, You Can Calculate Its ROI

19. Thank you! Paul Gillin 508-656-0734 [email_address] Site: gillin.com Blog: paulgillin.com Twitter: pgillin Free bi-weekly newsletter; sign up at gillin.com